Oil and Gold steady but risks to outlook remain

Oil stable for now but downside pressure remains

Oil prices have stabilized in recent days, with WTI hovering around the $40 mark after coming under heavy pressure earlier this week.

Prices remain vulnerable despite the fact that they have settled as the week has progressed. The risks to the outlook remain to the downside due to the rising Covid numbers across Europe which could necessitate further action from OPEC+ before the end of the year.

It could be this that has prevented oil prices falling further this week, after Saudi Energy Minister Abdulaziz bin Salman last week warned against shorting oil.

Gold hits two month low

Gold hit a two month low today and remains under pressure as support for the dollar continues to grow.

The yellow metal clearly has not lost its correlation with risk, with the dollar continuing to be the preferred save haven during times of turbulence. If the next month is going to be a challenge for risk markets, the dollar could have more downside to come yet.

The next barrier to the downside is $1,800, which could provide some support in the near-term.


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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.

His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.

Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.